What is self assessment?
Self assessment is a way of reporting to HMRC your income for the tax year, so you can pay tax and national insurance contributions. If you are employed these are collected through PAYE by your employer and paid to HMRC each month. If you are self employed you will need to complete a tax return.
Who needs to file a self assessment?
You will normally need to submit a return if you fall into one of the following categories:
Director taking dividends
Employed but incur expenses related to your jog for example working from home or washing your work uniform.
To see a full list please visit HMRC here.
How to register as self employed
If you run your own business and sell good or a service you will need to register as self employed and submit a self assessment. If you only occasionally sell items or occasionally rent out a property you will need to check with HMRC if you need to register or not.
Have you earnt more then £1000 from self employment in the tax year? You will need to register. We’d recommend if you have earnt less contacting HMRC anyway and making sure you don’t have to register. You can register here.
HMRC are trying to encourage people to submit their returns online, it’s a good habit to get into as we are moving away from paper and moving more and more into an electronic world.
You can file from early April with the deadline being 31st Jan of the following year. For example if you need to complete a return for 20/21 you have until 31st Jan 2022 to submit and pay.
You may receive a penalty and interest on late payments. If you can not make payments it is worth speaking to HMRC in advance and advsing them of this, you may be able to set up a payment plan.
What do I need to complete my tax return?
Invoices and receipts
P60 from your employer, you won’t have one if you are 100% self employed
p45 if you have left an employed job in the tax year.
Details of income, this may be from bank statements,
Savings and investment statements
The more organised you can be the less stressful submitting your self assessment will be. If you are unsure if you are claiming all the allowable expenses that you can or you are worried you will make mistakes, it is worth outsourcing to an accountant. If you would like to outsource your self assessment please get in touch here.
The information featured in this article is for guidance only, no liability is accepted for the opinions it contains.